The leap beyond Obamacare: There's a lot to like in the proposed Patient Freedom Act

Jim Lo Scalzo, EPA

Sen. Susan Collins, R-Maine, along with Sen. Bill Cassidy, R-La., speak about their own Obamacare replacement plan, which they call the Patient Freedom Act, in the Senate studio in the U.S. Capitol in Washington on Jan. 23, 2017.

Sen. Susan Collins, R-Maine, along with Sen. Bill Cassidy, R-La., speak about their own Obamacare replacement plan, which they call the Patient Freedom Act, in the Senate studio in the U.S. Capitol in Washington on Jan. 23, 2017.

Two decades ago, a Democratic president and a Republican Congress debated and eventually agreed on a way to, as Bill Clinton had urged, "end welfare as we know it." One key to reform: cede more power to states to design innovative programs to help the poor find work.

Today, a Republican president and Congress face a similarly daunting task: Replace Obamacare. Millions of Americans rely on it for health care coverage, including lower-income people covered under the law's Medicaid expansion.

Congressional Republicans recently began to dismantle Obamacare before building a replacement. President Donald Trump vows insurance for everyone in the replacement but hasn't elaborated. The Congressional Budget Office warns that at least 18 million people would lose heath insurance in the first year if Republicans repeal major parts of the Affordable Care Act without including a safety net. Even Republicans gung-ho to scrap Obamacare know that yanking health care from millions of Americans would be disastrous — for people's health and for lawmakers' political futures.

So it's encouraging that Republicans have begun the urgent debate on how to replace Obamacare. On Monday, a group of Republican senators led by Bill Cassidy of Louisiana and Susan Collins of Maine offered their proposal, the Patient Freedom Act. It's an approach similar to one that successfully shaped welfare reform in the 1990s. Specifically, handing states' flexibility to experiment, to learn the best way to give citizens coverage.

Under the proposal, states could keep Obamacare if they so choose. Or they could design their own programs while receiving a similar amount of federal money. "We are moving the locus of repeal to state government," Cassidy said. "States should have the right to choose." We wholeheartedly agree.

This proposal would repeal some mandates imposed by Obamacare, including the requirement that employers provide, and individuals buy, insurance. But it would preserve some of the most popular features of the law: Children could be covered by their parents' insurance plans until age 26, and insurance companies couldn't deny coverage based on a person's pre-existing medical condition.

States could enroll people who would otherwise be uninsured in health plans providing basic coverage against catastrophic medical expenses. (Given the huge deductibles under many Obamacare plans, that's essentially the coverage many Americans now have — at high premium costs.) States could even enroll residents by default into such plans unless people opt out. If they let their coverage lapse, though, they could be charged re-enrollment penalties and higher prices.

Other options: States could decide if they will stick with the current system of insurance exchanges, or people could receive tax credits to subsidize premiums in new state-run marketplaces. To appeal to consumers, sponsors of the bill envision many more coverage choices at affordable prices — not just the rigid metal-based Obamacare options (gold, silver, etc.).

All in all, that's a strong opening ante for a new law. No wonder the Patient Freedom Act is emerging in Washington as a proposal to watch.

Now, a related issue: Medicaid. An Obamacare replacement also could drive changes in how Medicaid is funded. The Trump administration favors giving states "block grants" — fixed amounts of money — to supply care to low-income people. States could decide how best to spend the money, presumably with less red tape from Washington.

Republicans long have pushed for this shift. But the prospect of a new federal Medicaid formula worries some governors, Democratic and Republican. They fear that a hasty demolition of Obamacare could bring a cut in federal Medicaid funding, forcing states to cut benefits or toss people (aka voters) off Medicaid rolls. Welfare reform provoked similar fears, but governors found creative ways to adjust. With or without a Washington fix, Medicaid likely faces cost pressure. In Illinois and elsewhere, the program has expanded enormously under Obamacare. Block grants could spur more of those creative adjustments.

The Cassidy-Collins proposal is one of many GOP alternatives we expect to hear debated soon. We hope Republicans don't just argue among themselves. They should invite their Democratic colleagues to chip in ideas to build the Obamacare replacement. That way they'll avoid the pitfall that Democrats didn't when they brushed aside Republican suggestions and jammed Obamacare through Congress without a single GOP vote.

In 1996, Republicans and Democrats produced a smart, bipartisan bill that helped millions of Americans escape welfare and achieve self-sufficiency. We hope the replacement for an Obamacare program that's falling apart will finally deliver quality health care coverage that Americans can afford.